Can't resize pictures

After successfully uploading lots of pictures, suddenly I'm having trouble. Images that are not the right size to fit in a blog are failing to resize. It doesn't matter if I choose Thumbnail, Medium, or Full Size, the picture will appear full size and be unreadable and ugly. Why has this stopped working?

I don't put images in wider than 520 pixels to begin with. Then once they are uploaded into the post, click in the middle to highlight and pull the image to the size I want by sliding the little squares that appear in the corners etc. Once the size I want, save. Hope that helps. Julie